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Thinking of Financing Your Engagement Ring? Here Are 6 Things You Should Avoid.

It's alright to cry it out. We'd cry too if we had to pay twice the retail value of an item.

Luxury goods such as high-quality jewelry have become a lot more accessible to people who don’t fall in the highest income brackets. Financing platforms have arguably contributed greatly to this increased accessibility.

Some would say buyers should be glad that financing big-ticket jewelry has become such a breeze. Despite this ease, though, buyers should also be wary of what financing luxury goods can entail. Among many things, customers must prepare to possibly pay myriad hidden fees, open up new lines of credit, and pull their hair out for a year or two.

This widespread confusion has led us to launch a new jewelry financing series. Over the course of the next couple of months, we’ll be talking all things financing—budgeting, typical APR, the fine print, you name it.

And what are we kicking this series off with?

A lesson on everything you should avoid when entering into a retail charge agreement with a jeweler. Enjoy!

Retail Installment Contracts vs. Retail Charge Agreements

Before we go into detail about the things you should avoid, we’d like to briefly explain the difference between retail installment contracts and retail charge agreements. Knowing the difference between these two agreements is a fundamental part of understanding the pitfalls of financing purchases.

A retail installment contract allows consumers to buy items by making a set number of payments (usually monthly) on those items. If, for instance, Little Johnny buys a one-hundred-dollar lollipop under the assumption that he’ll make four payments of twenty-five dollars, he has entered into a retail installment contract. Notice that the candy hasn’t technically been paid for until Johnny has made his final payment.

Which means that his purchase wasn’t financed by a lending institution.

Retail charge agreements are different beasts altogether. If Little Johnny buys that same lollipop under a retail charge agreement, his treat will have been financed by some entity. That entity could be a large bank or lease-to-own company.

In either case, Johnny has to find some way to pay his lender back not only the amount financed, but the finance charges on his purchase as well. If Johnny doesn’t pay the amount owed quickly, he’ll pay more in finance charges in the long run.

Both retail installment contracts and retail charge agreements are covered under individual state Retail Installment Sales Acts. This means that regulations concerning these agreements differ from state to state. That said, always check your state’s existing laws before entering into any agreements.

1. High (Interest) Rates

Now that we’ve covered some basics, let’s flesh out our list of things to avoid as a buyer. The first thing on our list?

High interest rates.

This one probably sounds like a no-brainer, but, in actuality, it isn’t. Big-ticket items such as engagement rings often trigger emotional responses on consumers’ parts, so they don’t always think straight. They desperately want to provide their partners with the rings of their dreams.

Which makes perfect sense given the history of the engagement ring in our society...

As a result, these buyers sometimes enter into agreements which gouge them for all they’re worth. A $3,000 purchase could turn into a $6,000 purchase (per the contract), leaving the consumer both flabbergasted and frustrated.

Note that high interest rates aren’t the only things to look out for when we talk about rates. Some companies like to tout their “interest-free” lending platforms as supreme. Many of them, however, do charge finance charges, which we’ll talk more about later.

So what’s our best advice to you here? Watch out for these high rates and always read the fine print, something we’ll encourage you to do again and again.

2. Credit Cards With Posh Names

If you’ve ever accidentally signed up for a “luxury” credit card, we offer our sincerest condolences. Few things are as jarring as unknowingly opening a new line of credit.

We already know what some of you are thinking: “How does someone just accidentally open a new line of credit? That’s just silly.”

Well, to put it simply: Branding.

Let’s examine, for example, how the typical large retailer brands its financing options. Many of these retailers—jewelers, furniture outlets, etc.—offer financing through large, well-known banks.

Think Wells Fargo, Synchrony, and Comenity Capital. The list goes on.

Instead of directly communicating that their jewelry financing options entail applying for new lines of credit through major banks, some of these businesses attach fancy names to those financing options. Many jewelers, for instance, are guilty of referring to credit cards as “Jewelry Cards” or something similar.

Many buyers have no idea that they’re actually applying for a new line of credit with a major bank. Some of them arguably wouldn’t finance their jewelry in this manner if they knew this information beforehand. A new line of credit can affect someone’s debt-to-income ratio, and this ratio is pretty important if that someone wants to make a big purchase in the near future.

3. Deferred Interest

Some of you might be preparing to disagree with us here, and that’s okay. We do, after all, concede that deferred interest isn’t completely nightmarish for everyone. Some people admittedly never have a problem with it.

Others, however, have the misfortune of ultimately paying that deferred interest because of some tiny miscalculation or unforeseen event. Some buyers, for instance, may owe a mere thirty dollars on their engagement rings when the deferral period ends.

But guess what? The bank doesn’t care. If you owe even a cent when the deferral period ends, you’re paying the interest you would have originally paid.

Sadly, not all consumers are aware of the fact that this is how deferred interest usually works. Perhaps that’s why deferred-interest promotions have come under scrutiny in the past.

So are we saying you should never go for deferred interest? Not exactly. We’re just asking you to really think about whether or not you could afford to pay the interest if you had to in the long run.

4. The “We Never Charge Interest” Spiel

Let’s get one thing straight: Companies rarely give out free money. It’s just too risky. Period.

So when a lender claims to never charge interest? There’s almost certainly going to be a catch. Trust us.

Some lending companies, for instance, don’t charge “interest”; they instead charge leasing fees or fixed finance charges. These fees and charges may seem preferable to interest, but they can cost buyers much more in the long run. In fact, customers can pay almost twice the retail value of their engagement rings in some situations.

If you do the math, it won’t take you long to realize that those customers essentially paid 100% interest on their purchases. But, hey, at least the extra cash they spent wasn’t technically called “interest.”

5. Prepayment Fees

If you loaned your friend money and he paid you back sooner than you expected him to, would you charge him for giving your money back early? This sounds comical, but it’s a serious question.

If you said no, we’d say you were a pretty reasonable person. If you said yes, on the other hand, we’d say you were a lender. Because this is exactly how some lenders operate.

To be honest, we can’t exactly tell you why buyout fees are even a thing. We can, though, say that not all lenders feel the need to charge them. Plenty of lenders would be thrilled enough that you paid them back early to not penalize you for it.

Needless to say, those are the kinds of lenders you want to borrow money from.

6. Hidden Fees

Technically speaking, some people would consider some of the fees we mentioned above hidden fees. That said, we went ahead and threw this one on our list because there is no upper limit on how many fees lenders will try to hide from you.

Our only real advice here is for you to read the fine print before you sign off on an agreement. If you find any contractual fees the salesman you spoke to didn’t freely offer up any information about, consider running the other way. There’s no reason to do business with a company that hides important info from you.

Always Read the Fine Print Before Financing An Engagement Ring

If there’s a single lesson to be learned here, it’s definitely that you should always read the fine print before financing your jewelry.

Because everything we talked about above is always in the fine print. No matter how duplicitous it sounds.

The Gage Diamonds Financing Difference

With that being said (and given this is our blog), we at Gage Diamonds saw an opportunity to provide better financing options for consumers shopping for engagement rings. Unlike other financing companies, we are sister companies with our financing partner 50|50 Pay. We make our “interest” by sourcing our products at wholesale prices and offering them at competitive retail prices. By partnering directly with 50|50 Pay we can offer transparent, 0% APR financing to our customers. Which means there is no interest, application fees, late fees or prepayment fees. What you see at checkout is always what you’ll pay.

If you are interested in financing your engagement ring or other fine jewelry, please visit our financing page to learn more and apply. If you have any questions, feel free to reach out to a customer service representative at or by calling 855-440-5050 (M - F, 10am to 6pm CST)